Asian currencies dip on US inflation data, some stocks hit records

By Archishma Iyer

March 13 (Reuters) –Most Asian currencies dipped on Wednesday, after hotter-than-expected inflation data in the United States suggested a slight increase in the risk that interest rate cuts may be delayed, though stocks were unruffled and touched record highs in Jakarta and Taipei.

The Philippine peso PHP= and Taiwan dollar TWD=TP lost about 0.3% and 0.2% each, with the former poised for its largest drop in two weeks as it gives back a little bit of recent gains. Phillipine stocks .PSI rose 1.2%.

Consumer prices in the world’s largest economy increased in February, beating consensus forecasts and gently pushing back on rate cut bets.

Futures pricing implies a 67% chance of the Federal Reserve lowering rates in its June meeting, down a tad from 71% earlier in the week, according tothe CME FedWatch Tool.

“Prospects of delayed Fed rate cuts means ‘higher for longer’ imposition on central banks elsewhere, and especially for EMs (including EM Asia), where front-running Fed rate cuts come at a cost of macro- and FX-stability,” Vishnu Varathan, chief economist Asia ex-Japan at Mizuho Bank, said in a client note.

Varathan added that the inflation print could be felt more acutely outside of the U.S. and this could limit the extent to which Asian emerging market currencies might benefit from an expected retreat by the dollar.

Other emerging Asian currencies such as the South Korean won KRW=KFTC, Singapore dollar SGD= and the Malaysian ringgit MYR= traded between flat and 0.2% lower.

The Indonesian rupiah IDR= propped up marginally, after coming off from a public holiday, while the Thai baht THB=TH followed suit.

Among Asian equities, Singapore .STI and Jakarta .JKSE firmed between 0.3% and 0.6%, with Indonesian shares touching a record high in early trade.

Indonesian shares have been drawing inflows from abroad in recent months, particularly into financial stocks because bank profits are expected to ride economic growth higher. Last month’s election victory by Prabowo Subianto was also welcomed as he’s seen delivering policy continuity. Foreign investor favourites in the banking and mining sectors led gains on Wednesday.

Markets in Kuala Lumpur .KLSE fell about 1%

Taiwan’s tech-heavy shares .TWII advanced as much as 1% to hit a new record high, before reversing gains to trade flat. Investors have constantly looked to pour their money into artificial intelligence stocks, driven by enthusiasm in the technology sector.

Taiwan Semiconductor Manufacturing 2330.TW, the heaviest weighted stock on the country’s benchmark index, rose nearly 1.2%

Elsewhere, Argentina’s monthly inflation slowed down more than expected in February to 13.2%, though the yearly rate was an eye-watering 276.2%. The country’s peso ARS=RASL last traded at 848.50 per dollar, while stocks .MERV ended over 7% higher overnight.

HIGHLIGHTS:

** Indonesia’s benchmark 10-year bond yield falls to 6.626%

** KKR to invest $400 mln in Philippine telecoms tower business

** Taiwan central bank sees CPI rising less than 2% this year, economic growth better than 2023

Reporting by Archishma Iyer in Bengaluru; Editing by Tom Westbrook and Edwina Gibbs